Aussie Dollar Drops as US Dollar Strengthens Despite Fed Rate Cut Hopes
The Australian dollar (AUD) slipped on Monday after gaining more than 1% in the previous session. The US dollar (USD) is regaining strength, pulling AUD/USD lower and stopping the recent bullish momentum.
The move comes after comments from Federal Reserve Chair Jerome Powell at the Jackson Hole meeting. Powell warned about risks to jobs but also highlighted that inflation is still not under control. This means the Fed’s next step is uncertain, even though traders are strongly betting on a September rate cut. Current market odds show around an 80–87% chance of a 25-basis-point cut.
In Australia, the Reserve Bank of Australia (RBA) is also expected to continue easing its policy. Some analysts believe the RBA could deliver a bigger 50-basis-point rate cut in November if growth slows further.
On the technical side, AUD/USD is trading near 0.648. The pair faces resistance at 0.649, which is the 50-day moving average. A break above this level could push prices toward 0.6568 or even 0.6625. On the downside, support is seen at 0.6477, and a drop below that could send the pair down to 0.6414 or the June low of 0.6372.
Impact:
AUD/USD might recover if Fed rate cut bets grow stronger. But if the US dollar keeps rising or the Fed turns hawkish, the Aussie could face more losses.